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Article
Publication date: 19 June 2023

Dina Hosam Gabr and Mona A. Elbannan

This paper aims to providea comprehensive review of the concepts and definitions of green finance, and the importance of “green” impact investments today. The core challenge in…

Abstract

Purpose

This paper aims to providea comprehensive review of the concepts and definitions of green finance, and the importance of “green” impact investments today. The core challenge in combating climate change is reducing and controlling greenhouse gas emissions; therefore, this study explores the solutions green finance provides emphasizing their impact on the environment and firms' financial performance. With increasing attention to the concept of green finance, multiple forms of green financial tools have come to fruition; the most prominent are green bonds.

Design/methodology/approach

This paper compiles a comprehensive green bond dataset, presenting a statistical study of the evolution of the green bonds market from its first appearance in 2006 until 2021.

Findings

The green bond market has seen massive growth over the years reaching $1651.92bn as of 2021. Findings show that green bonds are working towards shifting from high carbon-emitting energy to renewable energy, which is vital to economic development and growth. In congruence, green bonds are aligned with the United Nation's sustainable development goals (SDGs) amounting to $550bn for 2020, with the five most covered SDGs amounting to over 60%.

Originality/value

With growing worldwide concern for global warming, green finance became the fuel that pushes the world to act in combating and mitigating climate change. Coupled with adopting the Paris Agreement and the SDGs, Green finance became a vital tool in creating a pathway to sustainable development, as it connects the financial world with environmental and societal benefits.

Details

Management & Sustainability: An Arab Review, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2752-9819

Keywords

Article
Publication date: 29 February 2024

Vasundhara Saravade and Olaf Weber

This paper aims to examine the Canadian financial sector’s reaction to opportunities and risks created by the green bond market in a low-carbon and climate-resilient (LCR) economy.

Abstract

Purpose

This paper aims to examine the Canadian financial sector’s reaction to opportunities and risks created by the green bond market in a low-carbon and climate-resilient (LCR) economy.

Design/methodology/approach

The authors used a concurrent mixed methodological approach that undertakes an online survey and semistructured interviews with critical green bond market stakeholders.

Findings

The most significant market driver in Canada is the reputational benefit for stakeholders, i.e. its ability to meet the high demand for sustainable finance and the marketing potential of its green credentials. The major market barriers are transactional costs, i.e. additional tracking required for reporting purposes, lack of market liquidity and identification of environmental impact or additionality. Canadian green bonds are also more likely to be evaluated on their green impact than their global market peers.

Research limitations/implications

Limitations of this study include its focus on Canada, which may exclude or not apply to drivers and barriers in other green bond markets.

Practical implications

The paper helps create an accounting-based conceptual framework for key motivations and barriers that affect financial decision-making regarding green bonds.

Social implications

The authors identify economic and policy-related barriers and drivers for green bonds, addressing the financing gap for the LCR economy.

Originality/value

To the best of the authors’ knowledge, this study is the first to identify and compare Canadian green bond market drivers and barriers and to examine relevant stakeholder- and policy-related approaches that can be targeted to scale this market effectively.

Details

Sustainability Accounting, Management and Policy Journal, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2040-8021

Keywords

Article
Publication date: 20 February 2024

Ambareen Beebeejaun and Teekshna Maharoo

Financial institutions, including banks, have their responsibilities to contribute towards the preservation of the environment. Green banking is an emerging concept that involves…

Abstract

Purpose

Financial institutions, including banks, have their responsibilities to contribute towards the preservation of the environment. Green banking is an emerging concept that involves eco-friendly initiatives by banks and although Mauritius lacks a comprehensive regulatory framework for green banking, there exists a few green regulations and guidelines. Accordingly, the purpose of this study is to critically analyse the existing legal and regulatory framework on green banking in Mauritius. It is expected that this study will showcase the need for some more robust and proper green banking legal and regulatory framework in Mauritius.

Design/methodology/approach

To achieve the research objective, a black-letter analysis is used to analyse the existing regulatory framework in Mauritius. Moreover, a comparative analysis of the current legal frameworks on green banking in countries like Bangladesh, Indonesia, Pakistan and the UK is carried out.

Findings

This study recommends the establishment of a guideline or legal framework for green banking, a Sustainable Finance Policy, a legal binding framework for issuance of bonds, adoption of a Task Force on Climate-related Financial Disclosure guideline, compulsory environmental reporting and disclosures and a green standard rating.

Originality/value

To the best of the authors’ knowledge, this research is among the first literature on green banking laws, especially in the context of a developing country being Mauritius, and it is anticipated that the findings are of use not only to academics but also to the wider community in general.

Details

International Journal of Law and Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1754-243X

Keywords

Article
Publication date: 22 August 2023

Indar Fauziah Ulfah, Raditya Sukmana, Nisful Laila and Sulaeman Sulaeman

Green sukuk (Islamic bonds) is one of Islamic financial instrument as an alternative financing source for supporting green finance projects in several sectors such as renewable…

Abstract

Purpose

Green sukuk (Islamic bonds) is one of Islamic financial instrument as an alternative financing source for supporting green finance projects in several sectors such as renewable energy or climate change problems. The aim of study is to present an understanding of the issues, explore the lesson for government policy and identify the potential for future studies directions.

Design/methodology/approach

This study conducted a literature review on green sukuk or Islamic bonds based on eight journal databases. The authors have carried out a strict selection of journals that are only indexed by Scopus and are protected from predatory journals.

Findings

This study has selected 7 of 118 published articles on green topics. This study has found that 50% of green sukuk research is dominated by a theoretical qualitative approach. While research that uses a quantitative or empirical approach is still below 30%, followed by using mixed methods. This study finds that research discusses green sukuk on Sustainable Development Goals (SDGs) or environmental issues, especially climate change, COVID-19 issues and green financial reporting. In addition, in the existing literature, this study found that green sukuk has main advantages instead of green bonds where green sukuk must comply with sharia principles, namely, being free from usury, interest and uncertainty.

Practical implications

This study analyzes two important implications, namely, first, the implications of government policies regarding the potential for issuing green sukuk in supporting all programs on the agenda for the 2030 SDGs, especially controlling and preventing the adverse impacts of global climate change; second, the implications for further research, further researchers can refer to the results of this review to make it easier to find new research things about the relationship of green sukuk with SGDs.

Originality/value

To the best of the authors’ knowledge, this paper is the first review paper that structurally reviews the previous literature on green sukuk (Islamic bonds) based on reputable publisher journals that have been indexed by Scopus.

Details

Journal of Islamic Accounting and Business Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1759-0817

Keywords

Open Access
Article
Publication date: 3 October 2023

Miklesh Prasad Yadav, Shruti Ashok, Farhad Taghizadeh-Hesary, Deepika Dhingra, Nandita Mishra and Nidhi Malhotra

This paper aims to examine the comovement among green bonds, energy commodities and stock market to determine the advantages of adding green bonds to a diversified portfolio.

Abstract

Purpose

This paper aims to examine the comovement among green bonds, energy commodities and stock market to determine the advantages of adding green bonds to a diversified portfolio.

Design/methodology/approach

Generic 1 Natural Gas and Energy Select SPDR Fund are used as proxies to measure energy commodities, bonds index of S&P Dow Jones and Bloomberg Barclays MSCI are used to represent green bonds and the New York Stock Exchange is considered to measure the stock market. Granger causality test, wavelet analysis and network analysis are applied to daily price for the select markets from August 26, 2014, to March 30, 2021.

Findings

Results from the Granger causality test indicate no causality between any pair of variables, while cross wavelet transform and wavelet coherence analysis confirm strong coherence at a high scale during the pandemic, validating comovement among the three asset classes. In addition, network analysis further corroborates this connectedness, implying a strong association of the stock market with the energy commodity market.

Originality/value

This study offers new evidence of the temporal association among the US stock market, energy commodities and green bonds during the COVID-19 crisis. It presents a novel approach that measures and evaluates comovement among the constituent series, simultaneously using both wavelet and network analysis.

Details

Studies in Economics and Finance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1086-7376

Keywords

Article
Publication date: 31 May 2023

Abdur Rahman, Abu Umar Faruq Ahmad, Saeed Awadh Bin-Nashwan, Aishath Muneeza, Asma Hakimah Abdul Halim and Ruzian Markom

Green Sukuk (GS) is a recent innovation that has the potential to serve humankind in sustainable development. However, its potential can only be achieved if the proceeds of GS are…

Abstract

Purpose

Green Sukuk (GS) is a recent innovation that has the potential to serve humankind in sustainable development. However, its potential can only be achieved if the proceeds of GS are used for the priority areas needed. Therefore, the purpose of this study is to find out, using selected GS issued to determine whether the proceeds of GS are actually given to the needed areas.

Design/methodology/approach

This is qualitative research utilizing case studies where the “priorities given” areas are observed through information collected from the library that consists of primary and secondary sources, such as statutes, books, articles and internet sources, while “priorities needed to issue GS” areas are determined through information collected from Al-Quran and Hadiths to derive conclusions.

Findings

The outcome of this study reveals some untouched areas that needed immediate attention where GS can be implemented. This study recommends implementing GS for the plant, agriculture, forests, road, water, animal and others. One example in this regard is to create “forest sukuk,” which is a tool for financing forest preservation.

Originality/value

It is anticipated that, via the outcome of this research, GS issuance frameworks can be enhanced, especially in revising the areas in which Sukuk proceeds can be used, and it will provide guidance to the potential GS issuers to choose financing projects.

Details

Journal of Islamic Accounting and Business Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1759-0817

Keywords

Article
Publication date: 15 September 2023

Taicir Mezghani, Fatma Ben Hamadou and Mouna Boujelbène-Abbes

This study aims to investigate the impact of the COVID-19 pandemic on the time-frequency connectedness between green bonds, stock markets and commodities (Brent and Gold), with a…

Abstract

Purpose

This study aims to investigate the impact of the COVID-19 pandemic on the time-frequency connectedness between green bonds, stock markets and commodities (Brent and Gold), with a particular focus on China and its implication for portfolio diversification across different frequencies.

Design/methodology/approach

To this end, the authors implement the frequency connectedness approach of Barunik and Krehlik (2018), followed by the network connectedness before and during the COVID-19 outbreak. In particular, the authors implement more involvement in portfolio allocation and risk management by estimating hedge ratios and hedging effectiveness for green bonds and other financial assets.

Findings

The time-frequency domain spillover results show that gold is the net transmitter of shocks to green bonds in the long run, whereas green Bonds are the net recipients of shocks, irrespective of time horizons. The subsample analysis for the pandemic crisis period shows that green bonds dominate the network connectedness dynamic, mainly because it is strongly connected with the SP500 index and China (SSE). Thus, green bonds may serve as a potential diversifier asset at different time horizons. Likewise, the authors empirically confirm that green bonds have sizeable diversification benefits and hedges for investors towards stock markets and commodity stock pairs before and during the COVID-19 outbreak for both the short and long term. Gold only offers diversification gains in the long run, while Brent does not provide the desired diversification gains. Thus, the study highlights that green bonds are only an effective diversified.

Originality/value

This study contributes to the existing literature by improving the understanding of the interconnectedness and hedging opportunities in short- and long-term horizons between green bonds, commodities and equity markets during the COVID-19 pandemic shock, with a particular focus on China. This study's findings provide more implications regarding portfolio allocation and risk management by estimating hedge ratios and hedging effectiveness.

Details

International Journal of Emerging Markets, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1746-8809

Keywords

Article
Publication date: 8 May 2023

Emmanuel Joel Aikins Abakah, Aviral Kumar Tiwari, Johnson Ayobami Oliyide and Kingsley Opoku Appiah

This paper investigates the static and dynamic directional return spillovers and dependence among green investments, carbon markets, financial markets and commodity markets from…

Abstract

Purpose

This paper investigates the static and dynamic directional return spillovers and dependence among green investments, carbon markets, financial markets and commodity markets from January 2013 to September 2020.

Design/methodology/approach

This study employed both the quantile vector autoregression (QVAR) and time-varying parameter VAR (TVP-VAR) technique to examine the magnitude of static and dynamic directional spillovers and dependence of markets.

Findings

Results show that the magnitude of connectedness is extremely higher at quantile levels (q = 0.05 and q = 0.95) compared to those in the mean of the conditional distribution. This connotes that connectedness between green bonds and other assets increases with shock size for both negative and positive shocks. This further indicates that return shocks spread at a higher magnitude during extreme market conditions relative to normal periods. Additional analyses show the behavior of return transmission between green bond and other assets is asymmetric.

Practical implications

The findings of this study offer significant implications for portfolio investors, policymakers, regulatory authorities and investment community in terms of carefully assessing the unique characteristics offered by each markets in terms of return spillovers and dependence and diversifying the portfolios.

Originality/value

The study, first, uses a relatively new statistical technique, the QVAR advanced by Ando et al. (2018), to capture upper and lower tails’ quantile price connectedness and directional spillover. Therefore, the results possess adequate power against departure from mean-based conditional connectedness. Second, using a portfolio of green investments, carbon markets, financial markets and commodity markets, the uniqueness of this study lies in the examination of the static and dynamic dependence of the markets examined.

Details

International Journal of Managerial Finance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1743-9132

Keywords

Article
Publication date: 12 December 2023

Rupjyoti Saha and Santi Gopal Maji

The rapid global economic development in the last century, led by industrialization, brings environmental issues to the forefront as a serious concern. While some country-specific…

Abstract

Purpose

The rapid global economic development in the last century, led by industrialization, brings environmental issues to the forefront as a serious concern. While some country-specific studies are undertaken to find the effectiveness of different mechanisms for funding environment-friendly projects, to the authors' knowledge, no study has been conducted to examine the impact of green bonds (GBs) on CO2 emissions for a global sample. Against this backdrop, this study examines the general impact of GBs on CO2 emissions and its differential impact for developed and developing countries and country categorizations based on sustainable development.

Design/methodology/approach

The study selects a sample of 44 countries from 2016–2020. The authors use trend analysis and box plots to analyze the present GBs and CO2 emissions scenarios. Further, the panel data regression model is used to examine the overall impact of GBs on CO2 emissions and uncover the variation in such relationships regarding country-level economic and sustainable development. Generalized methods of moments (GMM) and instrumental variables (IV) models are used for robustness.

Findings

The yearly trend of GBs is upward at the global level, while CO2 emissions exhibit a marginal decline during the study period. However, significant variations are observed in such trends between developed and developing countries and country-level sustainable development. The authors' regression results show that GBs significantly negatively impact CO2 emissions globally. In addition, the effect of GBs on CO2 emissions is strongly negative for developing countries, while the same influence becomes weak for developed nations. Similar variations exist between countries based on sustainable development.

Originality/value

This is the first study in extant literature to examine such a relationship for a global sample of 44 countries. Further, this study makes a novel contribution by analyzing the variations in the GBs-CO2 emissions nexus for developed and developing countries and country-level sustainable development.

Details

International Journal of Emerging Markets, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1746-8809

Keywords

Article
Publication date: 12 September 2023

Imen Khanchel, Naima Lassoued and Ines Bargaoui

This study aims to examine the effects of green financing through pollution control bonds (PCBs) on environmental performance.

Abstract

Purpose

This study aims to examine the effects of green financing through pollution control bonds (PCBs) on environmental performance.

Design/methodology/approach

This study is based on a panel of 189 US energy utility firms observed over the period, 2011–2021 ; this study applies Generalized Method of Moments regressions.

Findings

This study found that PCBs positively affect environmental performance (aggregate measure, greenhouse emissions, waste landfill, waste incineration and waste recycling). These findings remain robust when this study considers alternative measures of PCBs and environmental performance, the quantile regression method and some firms’ attributes such as financial performance and firm age.

Practical implications

The results indicate that US energy utility firms have to adopt more PCBs. This study helps researchers, practitioners, shareholders, bondholders, equity analysts and local authorities such as the California Pollution Control Financing Authority, municipalities and investors understand PCBs issuance, usefulness and relevance.

Originality/value

To the best of the authors’ knowledge, this study is the first to explore the effectiveness of PCBs in reducing pollution.

Details

International Journal of Energy Sector Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1750-6220

Keywords

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